Taxpayers, students lose when school operators exploit weak laws

By Karen Yi and Amy Shipley

Unchecked charter-school operators are exploiting South Florida’s public school system, collecting taxpayer dollars for schools that quickly shut down.

A recent spate of charter-school closings illustrates weaknesses in state law: virtually anyone can open or run a charter school and spend public education money with near impunity, a Sun Sentinel investigation found.

Florida requires local school districts to oversee charter schools but gives them limited power to intervene when cash is mismanaged or students are deprived of basic supplies — even classrooms.

Once schools close, the newspaper found, districts struggle to retrieve public money not spent on students.

Among the cases the newspaper reviewed:

• An Oakland Park man received $450,000 in tax dollars to open two new charter schools just months after his first collapsed. The schools shuttled students among more than four locations in Broward County, including a park, an event hall and two churches. The schools closed in seven weeks.

• A Boca Raton woman convicted of taking kickbacks when she ran a federal meal program was hired to manage a start-up charter school in Lauderdale Lakes.

• A Coral Springs man with a history of foreclosures, court-ordered payments, and bankruptcy received $100,000 to start a charter school in Margate. It closed in two months.

• A Hollywood company that founded three short-lived charters in Palm Beach and Collier counties will open a new school this fall. The two Palm Beach County schools did not return nearly $200,000 they owe the district.

South Florida is home to more than 260 charter schools, many of them high-performing. Some cater to students with interests in the performing arts, science and technology, or those with special needs.

Like traditional public schools, charter schools are funded with tax money. But these independent public schools can be opened and operated by individuals, companies or cities, and they are controlled by volunteer governing boards, not local elected school boards.

When conceived two decades ago, charter schools were designed to be free from heavy oversight to encourage innovative approaches to education.

But that lack of regulation also can allow abuses.

In recent years, South Florida has seen a rise in charter-school closings because of spikes primarily in Broward and Palm Beach counties.

Fifteen charter schools in Broward have closed in the last two years. That number doubled the county’s total closures since charter schools first opened in Florida 18 years ago. Seven charter schools have closed in Palm Beach County in the last two years. That’s more than a quarter of the district’s historic total.

Eight of those failed schools lasted about a year or less. Five didn’t survive three months.

“These are our tax dollars,” said state Sen. Jeff Clemens, D-Lake Worth. “And to let them be used for a school that is only going to survive for one or two years is a huge waste of resources.”

Another 29 charter schools are expected to open in South Florida this fall.

Easy to open

State law requires local school districts to approve or deny new charters based solely on applications that outline their plans in areas including instruction, mission and budget. The statutes don’t address background checks on charter applicants. Because of the lack of guidelines, school officials in South Florida say, they do not conduct criminal screenings or examine candidates’ financial or educational pasts.

That means individuals with a history of failed schools, shaky personal finances or no experience running schools can open or operate charters.

“The law doesn’t limit who can open a charter school. If they can write a good application … it’s supposed to stand alone,” said Jim Pegg, director of the charter schools department for the Palm Beach County school district. “You’re approving an idea.”

That’s why the Broward school district did not weigh Winston A. Thompson’s financial background — a long history of court-ordered payments to creditors, foreclosures and a bankruptcy — before it gave him more than $100,000 in public money in 2013 to start a charter school.

Thompson, a longtime dean at Broward College, had pitched an innovative idea: a charter school for students interested in taking college courses.

He welcomed students to College Bound Academy of Excellence in Margate last fall. Two months later, Thompson shut down the charter, forcing 60 students to find new schools in the middle of the year.

Thompson said he could not afford buses to transport students. One teacher complained of owed wages and said students lacked textbooks. Records show the school owed about $141,000 to its landlord.

“The thinking and planning was not done adequately … I’m not blaming anyone except myself,” said Thompson, 61. “In my case, I put my own money into the project; I wasn’t looking to make a living off of that project.”

Charter-school advocates say the complexity of the application, which can run more than 400 pages, weeds out frivolous candidates. But school officials in Broward and Palm Beach counties told the Sun Sentinel some applicants simply cut and paste from previously approved applications available online.

Palm Beach County school officials say they received, and rejected, an application for Premier Palm Charter High School in 2013. The application had references to “Lee County” and even used student demographics for the wrong school district.

Local districts also must approve applicants before they’ve identified buildings for their schools. State law prohibits districts from requiring charter operators to provide certificates of occupancy until 15 days prior to the first day of school.

In the case of the two iGeneration Empowerment Academies in West Palm Beach, district officials requested a certificate of occupancy for their shared building for several weeks but never received it. Difficulties securing a facility triggered a host of problems that led to the schools’ quick closure.

The iGeneration Academies opened 11 days after classes were supposed to begin in 2013.

This building at 5829 Corporate Way in West Palm Beach was the site of the now-closed iGeneration Empowerment Academies. Photo by Mark Randall/Staff

As students showed up for class, parts of the building remained under construction. Classrooms had not undergone required fire inspections and sometimes lacked air conditioning, district documents show. The iGeneration charters bused their high schoolers on unauthorized daily field trips because they didn’t have enough seats at the school, records show.

On one trip, they lost a student. Though she was found four hours later, district officials immediately shut down the schools.

Because of the quick shut-down, the iGeneration charter schools were overpaid nearly $200,000, according to the Palm Beach County school district. The schools have not returned the money.

The company that founded the iGeneration charter schools, InterVisual Education, blamed the schools’ demise on the management company it hired to operate the schools months before they closed.

“What was supposed to get done, never got done,” said Stephanie Velez, manager of operations for InterVisual Technology, the parent company of InterVisual Education. “There was nothing we could do at that point.”

InterVisual founded and managed another school in Immokalee. That school also was shut down by the Collier County school district last December. District officials cited the school for employing uncertified teachers and failing to submit required financial reports, documents show.

InterVisual will open another school this fall in Davie, but company officials have no plans to manage it.

“We’ve had our taste, and we didn’t like it,” Velez said.

Students pay the price

A former teacher at the Ivy Academies stored her classroom supplies in the trunk of her car. Every morning, she’d wait for a phone call to find out where classes would be held that day.

“I would never know where we [were] going,” said teacher and former middle school dean Kimberly Kyle-Jones. “It was chaotic.”

The two Ivy Academies lasted only seven weeks.

The schools, managed by Trayvon Mitchell of Oakland Park, opened in 2013 at the Signature Grand reception hall in Davie.

Evicted over a bounced check, the schools relocated to a Fort Lauderdale church that did not have enough classrooms.

That’s when the daily field trips began.

On some days, students went to the Miami Seaquarium or local museums. Other days were spent at Holiday Park in Fort Lauderdale.

The schools then moved to a second church a few miles away.

Teachers complained of no school supplies and not enough drinking water for students.

“It was extremely impossible [to teach],” Kyle-Jones said.

Teachers and creditors alerted the Broward school district about the nomad campuses.

“We just couldn’t find them,” said Leslie Brown, a district official who helps oversee charter schools in Broward.

When the Broward school district located the schools, district officials shut the charters down.

“The biggest tragedy is what happened to those students during the course of time they were in that charter,” Broward Schools Superintendent Robert Runcie said. “When you get a lot of private actors coming into the marketplace, folks are in it to make money … Public education is not a place for you to come to make money.”

Florida allows districts to immediately close charter schools only when students’ health or welfare are threatened. Otherwise, districts must offer charters a 90-day window to remedy problems. Even then, charter schools can appeal to the state.

Every time a charter school closes, dozens of children are displaced — in some instances, mid-month. Many return to their neighborhood schools where some struggle to catch up because their charters did not provide required testing, instruction in basic subjects or adequate services for those with special needs.

“This isn’t just a regular business. This isn’t a restaurant that you just open up, you serve your food, people don’t like it, you close it and move on,” said Krystal Castellano, a former teacher at the now-closed Next Generation charter school. “This is education; this is students getting left in the middle of the year without a school to go to.”

Next Generation, an elementary school in Lauderdale Lakes, sometimes had no toilet paper, soap or paper towels in the student bathrooms during the 2012-13 school year, teachers said. Students sometimes ate hours after their designated lunchtimes, often from fast-food restaurants. A parent complained of a revolving door of teachers.

“Things were horrible,” said Cynthia Hazlewood, who helped build the school’s curriculum and has worked at other charter schools. “One day FPL came in and shut the lights off.”

The school shuttered weeks before the last day of school.

Despite the closures, parents increasingly are turning to charters as an alternative to traditional public schools, particularly in neighborhoods with low-performing schools.

“Especially in urban communities, people are disillusioned with the [public] schools and they want a change for their child,” said Bonnie Clemon Jr., a former governing board member of a now-closed Pompano Beach charter. “Charters open up … and they flock to them.”

Missing money

A handful of South Florida charter schools that failed in the past five years owe a total of at least $1 million in public education money to local school districts, records show. The actual amount may be much higher. Districts struggle to track spending at troubled schools.

School Districts

Local school districts divide tax money between traditional public schools and charter schools based on the number of students enrolled.

Charter schools, which receive public money in monthly installments based on student enrollment, can be overpaid if they overestimate their expected attendance or shut down abruptly.

State law requires that furniture, computers and unspent money be returned to the districts, but when officials attempt to collect, charter operators sometimes cannot be found.

“We do know there have been a few [charter schools] … where hundreds of thousands of dollars were never spent on kids, and we don’t know where that money went,” said Pegg, who oversees charters in Palm Beach County. “As soon as we close the door on those schools, those people scatter … We can’t find them.”

When a Broward school district auditor and school detective went searching for Mitchell at the Ivy Academies in September 2013, he left through a back door, records show. District officials said they have yet to find him, or to collect the $240,000 in public money the schools received for students they never had.

The Broward State Attorney’s Office is also investigating Mitchell and his involvement with the Ivy Academies.

The Palm Beach County school district never got back the $113,000 it overpaid La Mensa Academy in Palm Beach Gardens, which closed after a year. La Mensa projected it would have far more students than the five who showed up on the first day of school in 2011.

My Choice Academy has not returned $56,000 to the Palm Beach County school district but is seeking to reopen in the fall. It closed in January 2013 after four months in Riviera Beach because of problems with its lease. The school’s founder, Altermease Kendrick, said the start-up challenges were overwhelming.

“A small company that just has a heart for making a difference, they don’t [necessarily] have the dollars or backing to support that vision,” Kendrick said.

A few South Florida schools reported that they could not return equipment to the district because it had been stolen.

Kathleen C. Wright charter school in Tamarac, which closed last year, reported $13,600 worth of stolen technology after it was ordered to close by the school district because of low academic performance. According to a Broward Sheriff’s Office report, officials from the charter school said 17 laptops were stripped from the school’s shelves.

When the Miami-Dade school district demanded the return of more than $100,000 it overpaid the Tree of Knowledge Learning Academy in 2009, the year-old charter school ceased operations. The district did not recoup the money.

“It’s almost mind-blowing what’s going on,” said Rosalind Osgood, a Broward School Board member. “They just get away with it.”

Difficult to monitor

School districts have virtually no control over a charter school’s day-to-day operations. Charters are required to submit financial reports, but some don’t file them or turn in unreliable paperwork, the Sun Sentinel found.

Management companies, hired by two-thirds of South Florida’s charter schools, further complicate the school districts’ ability to monitor spending and discern who controls the purse strings, the newspaper found. These companies provide services ranging from targeted assignments to wholesale management of schools, and have received anywhere from 10 to 97 percent of a school’s budget, records show.

“They’re public schools in the front door; they’re for-profit closed entities in the back door,” said Kathleen Oropeza, who co-founded FundEducationNow.org, an education advocacy group based in Orlando. “There’s no transparency; the public has no ability to see where the profits are, how the money is spent.”

Some large management companies, such as Academica and Charter Schools USA, both based in South Florida, oversee multiple schools and continue to open more schools across Florida. Many are high-performing, offering proven alternatives for children.

But how they spend tax money and whom they hire are out of public view. At regular public schools, nearly every dollar can be followed and every hire tracked.

It’s unclear how Next Generation spent the nearly $1 million it received in tax money before closing down in April 2013. The charter school failed to file several required monthly financial reports and a mandatory end-of-the-year audit. Records show the school owed more than $2 million to creditors and $55,000 to the Broward school district.

Two management companies separately operated the school during its eight-month tenure.

Cory MacNeille founded Next Generation and created the first for-profit company to operate it. She then hired her mother, Judy Perlin, of Boca Raton, to join her in managing the school, records show.

In the previous decade, state investigators repeatedly had cited the two with misusing federal money under a program to provide meals for low-income children in South Florida, state public records and court documents show. The two ran Riverwood Youth Opportunities, Inc., a nonprofit.

In 2004, state officials found Perlin’s nonprofit improperly used federal dollars to lease two Mercedes Benz vehicles for her and her daughter; pay for lodging and meals at a Club Med; and purchase two airfares and lodging for travel to Garden City, N.Y. The organization was ordered to repay the state.

In 2005, the state health department said Perlin, the nonprofit’s CEO, let her daughter use federal dollars to advertise a personal business. The state temporarily barred both from the meal program.

In 2010, Perlin pleaded guilty to bribery charges related to the meals program and admitted taking $40,000 in kickbacks. She was ordered to pay a $3,000 fine and placed on two years’ probation.

Three months into the school year, the charter school’s governing board fired the management company run by Perlin and MacNeille. Perlin’s integrity and the company’s inexperience were among six issues board members cited for the decision, brief meeting minutes show. The two left the charter with a bare-bones staff and unpaid vendors, according to district documents and interviews with teachers.

Once Perlin and her daughter departed, the board hired a new management company, headed by Trayvon Mitchell.

Teachers said the school continued to decline, failing to prepare students for required state tests and neglecting students with special needs.

The school shut its doors weeks before the last day of school.

Mitchell could not be reached for comment. MacNeille and Perlin did not respond to specific questions about the state’s findings against them or the school’s finances.

“I think charter schools are very difficult, and I think they are underfunded,” MacNeille said.

Both charters and traditional public schools are funded based on the number of students they enroll. They receive about $6,000 per student from the state. Charters, however, receive a smaller share, as district officials keep a small percentage for administrative costs.

Charter advocates say they also bear additional costs, such as renting or building facilities, that stress their schools’ bank accounts. Charter schools can’t claim state dollars for facilities until after their third year.

“There’s been this big expansion, and not everybody is ready and not everybody realizes what it takes to run a school,” said Melissa Gross-Arnold, an attorney in Jacksonville who advises Florida charter schools. “They can put together a charter application and hit all the legal requirements, but there are a lot of challenges when you open.”

South Florida could see even more problems. A Sun Sentinel analysis of more than 230 audits found about 100 of South Florida’s charter schools spent more money last year than they brought in.

Explosive growth, few limits

Charters regularly pop up within blocks of each other — or in the same building — offering similar programs as neighboring schools. With such wild growth, district officials say, many new charters no longer fill a niche or offer innovation.

More than 20 states cap or allow districts to restrict the number of charters that can open, according to the National Alliance for Public Charter Schools. Washington limits the number of charter schools to 40; Illinois and Massachusetts, 120; New York, 460; and California, 1,750.

Connecticut must consider whether an area has too many charter schools before it can approve a new one. Washington allows only nonprofit management companies and requires financial and criminal background checks of schools’ management.

Florida, which has more than 620 charter schools, has few limits.

In fact, state lawmakers nearly amended charter-school rules to simplify their contracts last month. Lawmakers also took a pass when presented with proposed legislation that would have tightened the application process and increased control by local school districts.

Kin Griffith, a 20-year charter operator in Colorado and Florida, cautioned that increasing regulations could stamp out the mom-and-pop charter start-ups that have fewer resources than the large for-profit companies that manage many schools.

“Rather than adding more regulation, more red tape, more barrier to entry, the other option is to provide more support,” he said. “If you try to eliminate all the risk, you’re going to eliminate all the choices.”

Roughly one out of 10 students in Palm Beach County and one of seven in Broward attend a charter school. In the next five years, district officials predict, that percentage will nearly double in Palm Beach County. In Broward, one in five students will attend a charter.

With such rapid growth, school district officials say, the need for change is urgent.

They clamor for stiffer rules. They want applicants to show financial backing. They want more power to intervene with floundering schools. They also call for more transparency from — or the elimination of — for-profit management companies.

“The way the system is currently structured, it focuses on creating quantity and just letting as many players come through the pipeline” as possible, said Runcie, the Broward schools superintendent. “What we really should be doing is controlling for quality.”